The Bureau of Internal Revenue (BIR) has issued the guidelines for applying the excise tax on nonessential services under the Tax Reform for Acceleration and Inclusion (Train) law.
BIR issued on March 19 Revenue Regulation (RR) 2-2019, which provides the guidelines on the assessment of the 5-percent excise tax based on the gross receipts derived from the performance of services on invasive cosmetic procedures and surgeries for enhancing a patient’s appearance and not having anything to do with the treatment of an illness.
The Train law states that the government shall collect such tax equivalent based on the gross receipts derived from the performance of invasive cosmetic procedures and surgeries for the sole purpose of enhancing one’s appearance, net of excise tax and value-added tax.
The RR explained that cosmetic procedures considered to fall under noninvasive cosmetic procedures include: acupuncture rejuvenation therapy, collagen induction therapy, and dermal fillers, among others.
Noninvasive cosmetic procedures are procedures that are conservative and which does not require incisions into the body or removal of tissues.
As part of the invoicing requirement of the government, the practitioner shall issue an official receipt for the service they have provided whether invasive or noninvasive.
Authorized agent banks of the BIR under the jurisdiction of its Large Taxpayers Service or revenue district office are able to accept the excise tax payments from practitioners within the National Capital Region (NCR) along with the accomplished BIR form 2200-C.
Meanwhile, for practitioners who are working outside the NCR and where there are no AABs available, taxpayers are advised to submit their BIR form 2200-C with corresponding tax payments to the collection agent of the area where their businesses are registered.
For cosmetic procedures that are noninvasive and have been done by the practitioner, he/she is still required to submit BIR form 2200-C to the Excise Large Taxpayers Field Operations Division or the concerned revenue district office for those in the NCR, and the Excise Tax Area within regional offices for those outside NCR with no excise tax due.
The Train law comprises Package 1 of the Duterte administration’s Comprehensive Tax Reform Program, which slashes personal income tax rates while implementing offsetting measures such increasing excise taxes on fuel, and cigarettes, among others.